Realtor Jonah Wilson, of Sotheby’s International Realty in Los Angeles, watched some buyers delay second-home purchases in 2006 because they feared they would overpay should the market continue to soften. Wilson, who helps celebrities such as Courteney Cox and David Arquette scout properties in locales from Beverly Hills to Malibu, grew up amid star culture as the son of Beach Boy Carl Wilson, and later worked as tour manager for his cousins’ band, Wilson Phillips. Even though many luxury properties now take longer to sell—he estimates they spend 60 or 90 days on the market compared to 30 days in 2005—prices for the best properties remain resilient. Wilson sees continued strength among expensive properties. "It’s such a specialized part of the market," he says.

At the beginning of this year, Wilson started hearing from the buyers who had stayed on the sidelines in 2006. They had waited for a significant decline in second-home prices among the more desirable properties—but the drop never came. "Buyers who hung out all last year are saying, ‘Let’s find something,’" Wilson says. "They see it hasn’t been a huge, drastic change."

David and Rebecca Shopay understand the temptation to delay a purchase. "You don’t like to think you’re buying into a really, really weak market," David notes. But the couple say the home they selected at the Cliffs at Walnut Cove near Asheville, N.C., suits their interests, and they believe it will hold its value. The Shopays, whose primary home is in Marco Island, Fla., wanted a summer retreat. David retired about a year ago after selling his home-security company, Vanguard Security, to Tri-S Security. An avid golfer who now coproduces DVDs featuring the late golf legend Ben Hogan, David liked the Jack Nicklaus–designed links at the Cliffs. Rebecca, who enjoys hiking, also desired a location with extensive trails. So they signed a contract on a $2.6 million new home on the course’s first hole last November. Six people they know also bought in the area.

The Shopays, who envision living at the Cliffs six months each year and do not deem their home an investment property, believe they made the right decision. "You’re buying a really good quality product in a gorgeous place," Rebecca says. "We felt like it was worth the chance."

Lifestyle Alternatives
Lingering worries over the real estate sector may fade in 2007 as developers and homeowners see signs of a more robust market. Toll noted improving statistics at the beginning of the year—even in troubled markets such as northern California and parts of Florida. Some private equity investors, too, see greater strength in luxury real estate. TriLyn and Investcorp recently raised $100 million in capital commitments for mezzanine financing that will focus on real estate investments. TriLyn founder and managing principal Mark Antoncic sees continued opportunity among high-end luxury properties. "The dynamics of that sector appear to be holding up," he says.

More importantly, the underpinnings for substantial growth in the luxury second-home market remain attractive. Toll says his company will expand its second-home communities with new projects planned for Las Vegas, Reno and Phoenix through 2009. He believes more and more affluent baby boomers will crave second homes. According to American Demographics magazine, second-home ownership among this group could grow from about 6.4 million units in 2000 to some 10 million in 2010.